• Abstract and Figures
• Public Full-text

University of Baltimore Law Review Volume 22 Article 4 Issue 1 Fall 1992 1992 Personal Liability of Corporate Officials in Ejectment Actions: Evolution of the Tort and the Implications of Metromedia Co. v. WCBM Maryland, Inc. Lawrence S. Greenwald Gordon Feinblatt LLC Charles S. Hirsch Ballard Spahr LLP Follow this and additional works at: http://scholarworks.law.ubalt.edu/ublr Part of the Business Organizations Law Commons, and the Torts Commons Recommended Citation Greenwald, Lawrence S. and Hirsch, Charles S. (1992) "Personal Liability of Corporate Officials in Ejectment Actions: Evolution of the Tort and the Implications of Metromedia Co. v. WCBM Maryland, Inc.," University of Baltimore Law Review: Vol. 22: Iss. 1, Article 4. Available at: http://scholarworks.law.ubalt.edu/ublr/vol22/iss1/4 This Article is brought to you for free and open access by ScholarWorks@University of Baltimore School of Law. It has been accepted for inclusion in University of Baltimore Law Review by an authorized administrator of ScholarWorks@University of Baltimore School of Law. For more information, please contact [email protected]. PERSONAL LIABILITY OF CORPORATE OFFICIALS IN EJECTMENT ACTIONS: EVOLUTION OF THE TORT AND THE IMPLICATIONS OF METROMEDIA CO. V. WCBM MARYLAND, INC. Lawrence S. Greenwaldt and Charles S. Hirschi Most corporate officers and dire\!tors sleep easily at night be­ lieving that if they act solely in the best interest of their corporation and avoid activities that would permit the piercing of the corporate veil, I they are insulated from personal liability for actions taken on behalf of the corporation. The Court of Appeals of Maryland recently sent a wake-up call to corporate officers and directors in Metromedia Co. v. WCBM Maryland, Inc. 2 In WCBM, the court r~affirmed a long held, but frequently overlooked, principle - that corporate officers and directors are personally liable for tortious acts that they commit, inspire, or in which they participate, even if performed in the name of the corporation. What may add an extra jolt to an already restless group of corporate officials is that the underlying cause of action in WCBM was ejectment, an action that many people think of as strictly possessory. This article will discuss the nature and evolution of ejectment as a tort, the individual liability of corporate officials for tortious acts, and the WCBM case. I. HISTORY OF EJECTMENT Although misconceptions exist surrounding the nature of eject­ ment, it is historically a tort action. Ejectment originated at common law as a form of trespass. 3 At common law, a tenant could bring an action for ejectment to recover damages from a person who wrongfully ejected him from his premises. 4 Under the original form of an ejectment action, a plaintiff's recovery was limited to damages; t B.S., 1961, University of Pennsylvania; L.L.B., 1964, Harvard University; Partner, Gordon, Feinblatt, Rothman, Hoffberger & Hollander, Baltimore, Maryland. :I: B.A., cum laude, 1983, University of Maryland; J.D., 1987, Georgetown University Law Center; Associate, Ballard, Spahr, Andrews & Ingersoll, Bal­ timore, Maryland. 1. See Bart Arconti & Sons, Inc. v. Ames-Ennis, Inc., 275 Md. 295, 310-12, 340 A.2d 225, 234-35 (1975) ("[T]he corporate entity will be disregarded ... to prevent fraud ...."). 2. 327 Md. 514, 610 A.2d 791 (1992). 3. Trespass has long been recognized as a common law tort. W. PAGE KEETON ET. AL., PROSSER AND KEETON ON THE LAW OF TORTS § 13, at 67 (5th ed. 1984). 4. ALLAN H. FISHER, ESSENTIALS OF MARYLAND PLEADING at 188-89 (2d ed. 1922); MARTIN NEWELL, NEWELL ON EJECTMENT 2 (1892). 38 Baltimore Law Review [Vol. 22 he could not recover possession of the premises. S Recovery in eject­ ment actions was eventually expanded in the fifteenth century to include both damages and possession.6 Even in its expanded form, ejectment was available only to tenants, not landowners. 7 A landowner who sought to recover pos­ session of his property had to bring "real actions" that have been described as involving "almost endless technicalities and subtleties."8 In order to avoid the technicalities and subtleties associated with real actions, a practice developed· in which the landowner would create a "straw" tenant who would lease the land from the landowner; the straw tenant would then file an action in ejectment to oust the "trespasser. "9 Since the straw tenant was only a nominal plaintiff suing on behalf of the landowner, his recovery was limited to possession of the property and nominal damages. 10 In order to recover actual damages, II the landowner had to bring a subsequent action for trespass, on the theory that once the defendant was adjudged to be wrongfully in possession of the property, he was liable to the landowner for trespass damagesY This was the state of the common law of ejectment in England when it was adopted in Maryland. 13 The court of appeals discussed this history in one of its early ejectment cases: [When] the action of ejectment remained in its original state, and the ancient practice prevailed, the measure of the damages given by the jury, when the plaintiff recovered his term, were the profits of the land accruing during the tortious holding of the defendant. But as upon the intro­ duction of the modern system, the proceedings became altogether fictitious, and the plaintiff merely nominal, the damages assessed became nominal also .... It was therefore 5. Arthur G. Sedgwick & Frederick S. Wait, The History oj the Action oj Ejectment in Eng/and and the United States, in 3 SELECT ESSAYS IN ANGLO­ AMERICAN LEGAL HISTORY 611 (1909); HARRY M. SACHS, JR., POE'S PLEADING AND PRACTICE § 50, at 73 (6th ed. 1970). 6. NEWELL, supra note 4, at 7-8; SACHS supra note 5, at 73. 7. NEWELL, supra note 4, at 7-8; SACHS supra note 5, at 73-74. 8. NEWELL, supra note 4, at 8. 9. SACHS, supra note 5, at 73-74. 10. [d. at 74. 11. The damages available were mesne profits. Mesne profits are profits occurring during wrongful possession, BLACK'S LAW DICTIONARY 990 (6th ed. 1990), or specifically "the rents and profits, or the value of the use and occupation of the real property recovered in an action of ejectment during the period the property has been wrongfully withheld." NEWELL, supra note 4, at 606. 12. SACHS, supra note 5, at 74. ' 13. Maryland explicitly adopted the common law of England as it existed on July 4, 1776. MD. CODE ANN., CONST. art. 5 (Maryland Declaration of Rights). 1992] Personal Liability of Corporate Officials 39 necessary, to give another remedy, to the claimant for these damages. 14 Unlike a minority of states, which changed the common law of ejectment to permit plaintiffs to recover damages under an implied contract theory, IS Maryland left the essence of ejectment intact, although the legislature eventually simplified the action. In 1870 the legislature eliminated the need to use straw tenants when it enacted legislation that permitted a landowner to bring an action for ejectment in his own name. 16 In 1872, the legislature went a step further when it eliminated the need to bring two separate actions to recover possession and damages by permitting an aggrieved party to recover both possession and actual damages in a single action. 17 As a result of these changes, however, a plaintiff who files suit for ejectment must now pray for both possession and damages in his complaint; otherwise he is barred from recovering damages in a subsequent action.ls II. CURRENT STATE OF EJECTMENT Despite its evolution and modernization, the nature of ejectment as a tort remains unchanged. The statutory changes, which eliminated the use of straw tenants and permitted plaintiffs to recover possession and damages in a single action, affected only the procedure itself, and left untouched the principles that govern the action. 19 The Court of Appeals of Maryland has repeatedly held that the damages recov­ erable in an action for ejectment are tort damages.20 The court of 14. Mitchell v. Mitchell, 1 Md. 55, 58-59 (1851) (quoting ADAMS ON E1ECTMENT 379). 15. NEWELL, supra note 4, at 609 (stating in 1892 that the action of ejectment "is no longer treated as sounding in tort, but rather as one founded upon an implied contract"); see, e.g., Holmes v. Davis, 19 N.Y. 488, 491-95 (1859) ("The Revised Statutes have prescribed as the measure of damages in this class of cases [ejectment] the same rule which would prevail in assumpsit for use and occupation. The compensation is to be adjusted as upon contract, and not upon the footing of a tort."). 16. SACHS, supra note 5, at 74. 17. Id. at 74 & n.68. 18. MD. RULE T40(4), T43; see also Strathmore Coal Mining Co. v. Bavard Coal & Coke Co., 139 Md. 355, 370, 116 A. 570, 575 (1921) (citing Gibbs v. Didier, 125 Md. 486, 94 A. 100 (1916» (stating that if a plaintiff fails to recover damages in an ejectment action, the plaintiff is barred from recovering the same damages in a different suit). 19. FISHER, supra note 4, at 189. 20. See Strathmore Coal Mining, 139 Md. at 371, 116 A. at 575 (A plaintiff's "right to recover for damages suffered by him caused by the ejectment from and detention of the premises should be coextensive with his right to recover in trespass cases."). In Van Ruymbeke v. Patapsco Industrial Park, 261 Md. 40 Baltimore Law Review (Vol. 22 appeals' treatment of damages in actions for ejectment accords with other states which have not altered the common law of ejectment.21 The court of appeals reaffirmed its view of damages in actions for ejectment in Metromedia Company v.

Load more

  9

Copy Link